Mazda's CEO seeks to play product, pricing right in the U.S.

HIROSHIMA, Japan -- Mazda Motor Corp. CEO Masamichi Kogai is completing the Japanese carmaker's transition from products co-developed with Ford Motor Co. to the new generation of in-house Skyactiv vehicles.

Next spring's arrival of the redesigned CX-9 crossover, a vehicle created mainly for North America, will finish that overhaul and is expected to give the brand a needed boost in U.S. sales. Sales in Mazda's biggest market are up 3.2 percent this year, but the rise trails the overall market's, so the brand is losing share.

Kogai, 61, is betting new product and a disciplined approach to incentives eventually will build brand value and lift volume.

A: In the first half [of the fiscal year, through September], we have been selling down the Mazda2 and Mazda5 [which are being phased out] in the U.S. Therefore, when you compare year on year without those two models, I think it hasn't been that much of a decline. Our sales of new-generation models are doing quite well. And we have been able to hold down incentives.

Looking to the second half, we believe volume will follow from our strategy. The CX-3 and MX-5 will help lead the growth.

We are sticking to our right-price policy, and we have been holding down our ratio of fleet models. So we have been able to improve the quality of our sales. We are quite satisfied.

When does the CX-9 arrive, and what role will it play?

Next spring. We are now preparing for mass production. The CX-9 is a high-end SUV and our only vehicle with three rows of seats.

North America will be the main market, followed by Australia. North America will account for about 80 percent of global volume. Total volume will average about 50,000 units annually.

What is the relationship between the CX-9 and the Koeru crossover concept that was shown at this year's Frankfurt show?

They aren't related. The Koeru is a sporty SUV. The CX-9 rides higher; so does the CX-3 and CX-5. [The Koeru] aims to generate more driving pleasure. It's a totally new car. It's a lower, sporty SUV. It's close to a wagon.

Like the Subaru Outback?

That kind of genre. We'd like to see how it is evaluated globally, so we are collecting customer feedback.

You call the CX-9 high end. Are you trying to position the brand more upmarket?

We don't talk about the Mazda brand being premium or nonpremium. Rather, we see the car as more than just a commodity. The driver spends a lot of time in the car, so the car needs to offer vitality to help the driver enjoy that time.

We want to incorporate that kind of value into the car.

That's why we are improving our exterior and interior design. When customers understand that value, they perceive the car as something worth paying the right price for.

What is Mazda's production capacity and what are the plans to improve capacity utilization?

Globally, we now have capacity of about 1.7 million units.

We have a sales volume goal of 1.65 million units in the fiscal year ending March 2019. This fiscal year, sales are about 1.5 million. So we can meet the goal with our current capacity.

But beyond that, we need to improve capacity utilization.

Hiroshima's Ujina plant produces the CX-5. The original production volume was 240,000 units. But we are now producing more than 300,000. Engineers and workers have introduced steady improvements to make that possible. We need similar efforts at our plants in Hofu, Japan, and in Mexico and Thailand.

How will Mazda meet California's zero-emission regulations?

Even though we've focused on improving the internal combustion engine, that doesn't mean we haven't been working on electrification. We have made advancements in that area as well.

In Japan, about 100 electric Demios [known as the Mazda2 in other markets] have already been tested and driven on the roads. Another area is utilizing hydrogen. We have hydrogen rotary-engine hybrid technology. These are included in our building-block strategy. When the time is right, we will talk more about specifics.

It's not our intention to just introduce an electric vehicle. We want to develop proficiencies in the underlying system technologies, such as battery or motor control technologies.

What hurdles remain with the rotary engine?

We do not have any concrete plans for the rotary engine yet. We still have to make some improvements and continue technological development in the areas of environment and performance.

We have a very high target, and I have high expectations that our engineers will make improvements and achieve it.

With the rotary range extender, we still face several issues. We need to make it lighter and more compact and improve cost.

Is there a timeline?

We have not set a timeline. I want engineers to work with the time they need.

The CX-9 also gets turbocharging. Will there be more from Mazda?

Downsized turbocharging has been popular in Europe. But our initial Skyactiv technologies did not use it.

What we have developed now is a low-cost, high-performance engine. We used to have a V-6 engine as our big-displacement engine. But there were various costs involved with that. Now, we want to improve the four-cylinder engine through turbocharging. We have countered turbo lag and incorporated the latest technology. We will deploy it in the CX-9 and gauge customer reaction. If there is demand, we may deploy it in other models.

How has the Volkswagen diesel scandal affected Mazda's plans to bring diesels to the U.S.?

I believe diesel technology itself was not affected by that incident. It was an isolated incident. Mazda doesn't use such illegal software in either gasoline or diesel engines.

We are sticking to our plan to introduce diesels to America. So we are continuing development to deliver environmental performance with Mazda's unique driving style.

Ford has sold the last of its holdings in Mazda. What does that mean for your joint projects?

We have joint ventures with Ford in Thailand and China. We get big benefits from working together with Ford. At AutoAlliance Thailand, we get more than 200,000 units through the mass production effect with Ford, and that leads to cost improvement. Meanwhile, there is a big volume of Ford Sigma engine production at CFME [Changan Ford Mazda Engine].

Those will continue?

Yes.

What is next in Mazda's partnership with Toyota?

Regarding something new with Toyota after this year's announcement of a cooperation agreement with them, we haven't decided anything yet about specific themes on which we will work together. We have set up committees to discuss that.

We believe there are big possibilities. Toyota looks at production from a global viewpoint, so they have quite strict standards for testing and evaluation. So we need to work in development to meet those standards. I believe it's going to be good for personnel and human resources development.